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Wednesday, Feb. 8, 2012

Cynthia Anderson, Adm. of the Estate of Ronald E. Anderson and Javarre J. Tate v. City of Massillon et al., Case no. 2011-0743
5th District Court of Appeals (Stark County)

State of Ohio ex rel. Michael DeWine, Attorney General of Ohio, et al. v. GMAC Mortgage, LLC, et al., Case no. 2011-0890
U.S. District Court for the Northern District of Ohio

State of Ohio v. Regina Niesen-Pennycuff, Case no. 2011-1070
12th District Court of Appeals (Warren County)

Disciplinary Counsel v. Dean Edward Hines, Case no. 2011-1759
Montgomery County


Is Driving Over Speed Limit Sufficient Basis to Deny City's Immunity Claim for Fire Engine Crash During Emergency Run?

Under State's Political Subdivision Immunity Statute

Cynthia Anderson, Adm. of the Estate of Ronald E. Anderson and Javarre J. Tate v. City of Massillon et al., Case no. 2011-0743
5th District Court of Appeals (Stark County)

ISSUES:

BACKGROUND: Ohio’s political subdivision immunity statute, R.C. Chapter 2744, provides that a city and its employees are generally immune from civil liability for damages suffered by third parties as a result of traffic accidents caused by police or firefighters while they are responding to an emergency call. However, the law provides specific exceptions to that immunity. One of those exceptions, set forth in R.C. 2744.02(B)(1)(b), states that a political subdivision may be held liable for third-party injuries if a crash resulted from “willful or wanton misconduct.” A separate provision, R.C. 2744.03(A)(6)(b), states that an individual public employee is not immune from liability if the conduct that caused injury during an emergency run was “wanton or reckless” in nature.

In this case, Massillon firefighter Susan Toles was driving a city fire truck on an emergency run when it was involved in a traffic accident that caused the death of another driver, Ronald Anderson, and Anderson’s grandson, Javarre Tate, who was a passenger in his vehicle.  Ronald Anderson’s wife, Cynthia Anderson, filed suit on behalf of her husband’s and grandson’s estates against the city, and also named Toles and Captain Richard Annen, who was in command of the fire engine at the time of the accident, as individual defendants.

Massillon moved for summary judgment, arguing that because the accident took place while Toles, Annen and the fire engine in which they were riding were responding to an emergency call, the city was immune from civil liability under  R.C. Chapter 2744. Anderson opposed that motion, arguing that the exception to immunity for “wanton” and “reckless” conduct applied because Toles was driving faster than the speed limit and did not stop before entering the four-way-stop intersection where the collision took place. The trial court granted summary judgment in favor of the city.

Anderson  appealed the trial court’s ruling. On review, the 5th District Court of Appeals reversed the award of summary judgment and remanded the case to the trial court for further proceedings.  In its decision, the court of appeals held that Toles’ actions in exceeding the posted speed limit and failing to stop before entering the intersection raised a material question of fact about whether her actions were “wanton” or “reckless.” The 5th District held that question was sufficient to support a possible finding by a judge or jury that, under the totality of the circumstances, Toles’ conduct was “reckless.” 

Massillon sought and was granted Supreme Court review of the 5th District’s decision.

Attorneys for Massillon assert that the 5th District erred by denying summary judgment in favor of the city based on a possible finding of “reckless” conduct, because the subsection of R.C. 2744.02 applicable to a political subdivision, R.C. 2744.02(B)(1)(b) does not impose a standard of recklessness but rather requires a showing of “wanton” or “willful” misconduct, a standard which they say requires a showing of “perverse disregard” of a known danger that cannot be met by Anderson based on the facts of this case.  The city also points out that its ordinances and rules for operation of public safety vehicles specifically allow firefighters responding to emergency calls to exceed posted speed limits and enter intersections without coming to a full stop, and argues that the 5th District’s denial of immunity for Toles and Annen based on those alleged “reckless” acts is contrary to the intent of the immunity statute, which is to spare political subdivisions and their taxpayers from the cost of defending civil lawsuits for injuries that may arise from the reasonable operation of public safety vehicles when responding to emergency calls.

Attorneys for Anderson point out that the 5th District’s decision did not make a finding of liability against Massillon or the individual firefighters, but merely held that facts alleged in her complaint, including the fire truck’s high rate of speed, failure to slow down before entering the intersection, obstructed view of crossing traffic and other factors were sufficient to preclude summary judgment in favor of the city. They urge the Court to affirm the court of appeals’ ruling that those alleged facts are sufficient to allow Anderson to argue to a judge or jury that, under the totality of the circumstances, Toles’ operation of the fire truck at the time of the accident was “wanton” or “reckless” and therefore the city and individual firefighters were not entitled to immunity.

Contacts
Gregory A. Beck, 330.499.6000, for the city of Massillon and firefighters Susan Toles and Richard Annen.

David L. Dingwell, 330.455.6112, for Cynthia Anderson et al.

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Is Mortgage Servicing Company Subject to Sanctions Under Ohio Consumer Sales Practices Act?

Suit Seeks Damages for Filing of False Affidavits in Mortgage Foreclosure Cases

State of Ohio ex rel. Michael DeWine, Attorney General of Ohio, et al. v. GMAC Mortgage, LLC, et al., Case no. 2011-0890
U.S. District Court for the Northern District of Ohio

ISSUE: Can a mortgage servicing company that collects monthly mortgage payments, negotiates late fees and loan adjustments and pursues foreclosure actions against homeowners on behalf of residential mortgage lenders be held liable for civil penalties under the Ohio Consumer Sales Practices Act (CSPA) for engaging in unfair or deceptive practices in the litigation of a foreclosure action?

BACKGROUND: In 2010, based on information disclosed in lawsuits in several other states, the Ohio attorney general’s office filed suit against GMAC Mortgage LLC in the Lucas County Court of Common Pleas. The state’s complaint alleged that in hundreds of mortgage foreclosure actions filed in Ohio courts over the preceding two years, GMAC employees had signed and filed with the court affidavits falsely attesting that the signer had personally reviewed the mortgage instrument, verified the homeowner’s missed payments and failure to make up those payments, and had personal knowledge that all required foreclosure notices had been sent to the homeowner, when in fact the signers had not done those things.

The attorney general asserted that by filing false affidavits, which were relied on by the courts in granting judgments of foreclosure, GMAC had engaged in common law fraud and had also violated the Ohio CSPA by committing unfair, deceptive and unconscionable acts “in connection with a consumer transaction.”  The attorney general sought injunctive relief, monetary damages on behalf of homeowners whose mortgages had been foreclosed based on the defective affidavits, and civil damages of up to $25,000 per violation under the CSPA for each document falsified by GMAC employees.

GMAC removed the case to the U.S. District Court for the Northern District of Ohio, which consolidated it with a separate lawsuit that had previously been filed in that court by a group of individual homeowners asserting similar claims against GMAC.

GMAC filed a motion asking the federal court to dismiss all claims that were based on alleged violations of the Ohio CSPA. The company based that motion on the argument that its only “customers” were the lending institutions whose mortgages it had contracted to service, and because GMAC did not have a supplier/consumer relationship with the homeowners whose loans were foreclosed, its conduct in pursuing foreclosure lawsuits against those persons was not part of a “consumer transaction” and therefore was not subject to the provisions of the CSPA.

The federal court found no prior court decisions addressing the applicability of the Ohio CSPA to the servicing of residential mortgages. Because the central issue in the dispute required interpretation of an Ohio law, the federal court stayed its proceedings and asked the Supreme Court of Ohio to answer three certified questions of state law: 1) Does the servicing of a borrower’s residential mortgage loan constitute a “consumer transaction” as defined in the CSPA?  2) Does the prosecution of a foreclosure action by a mortgage servicer constitute a “consumer transaction” as defined in the CSPA? and 3) Is an entity that services a residential mortgage loan, and prosecutes a foreclosure action, a “supplier ... engaged in the business of effecting or soliciting consumer transactions,” as defined in the CSPA?

In briefs filed with the Supreme Court, attorneys representing the attorney general and foreclosed homeowners urge the Court to answer each of the certified questions in the affirmative. They point out that all of the day-to-day business “transactions” through which the homeowners made monthly payments on their mortgages, sought information about their loan and escrow balances, negotiated disputes over late charges or other penalties, sought adjustments in their loan terms and finally went through the foreclosure process, were transactions in which those individual consumers interacted directly with GMAC, and in which they were directly impacted by GMAC’s business practices.

They note that the legislature included language in the CSPA that explicitly excludes an “assignee or purchaser” of a mortgage loan from the definition of a “supplier” of goods or services subject to the CSPA, but made no similar exclusion for mortgage servicing companies. They also argue that GMAC’s actions in this case are not exempt from the requirements of the CSPA under an exemption for “real estate transactions,” based on prior court decisions holding that the real estate exemption applies narrowly to the actual sale of real property, but not to the negotiation or servicing of a mortgage loan through which a buyer finances such a sale.

Attorneys for GMAC urge the Court to answer “no,” to each of the three certified questions. They argue that the CSPA applies only to transactions in which there is a sale or transfer of goods or personal services between a business entity and an end consumer.  In this case, they assert, the only business transaction engaged in by GMAC was entering into contracts with mortgage lenders to provide them with loan collection and account management services. They point out that the terms and conditions governing the repayment of loans by homeowners, and the legal recourse available to lenders if the homeowner defaults, are contained in the mortgage document, which is a contract between the lender and the borrower to which GMAC is not a party.

They also assert that the exception in the CSPA excluding real estate sales from the law’s provisions must be applied to all transactions that are integral to the purchase of real property, including servicing of the mortgage notes that are an essential element in virtually all residential real estate transactions.

Contacts
Alexandra T. Schimmer, 614.995.2273, for the Attorney General of Ohio.

Jeffrey Lipps, 614.365.4100, for GMAC Mortgage LLC.

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When Drug Charge Dismissed After Intervention Program, Does Law Require Waiting Period Before Record May Be Sealed?

State of Ohio v. Regina Niesen-Pennycuff, Case no. 2011-1070
12th District Court of Appeals (Warren County)

ISSUE: Under Ohio’s “Intervention in Lieu of Conviction” (ILC) statute, when a trial court has dismissed charges that were pending against a defendant without a conviction based on her successful completion of an alcohol or drug intervention program and a specified period of sobriety, may the defendant apply for immediate sealing of the case record, or is the court required to observe a waiting period before entertaining a motion to seal the record pursuant to the laws applicable to expungement of a criminal conviction?

BACKGROUND: In certain first-offense cases where a trial court finds that alcohol and/or drug dependency was a significant factor in a defendant’s criminal conduct, Ohio’s ILC statute, R.C. 2951.041, authorizes the court to defer prosecution of criminal charges pending the defendant’s completion of an intervention program and a specified period of monitored abstention from drug and alcohol use.  If the defendant  successfully completes the intervention/abstinence program, the court is authorized to dismiss the pending charges without recording a conviction or determination of guilt.

A subsection of the ILC statute, R.C. 2951.041(E), states that after a criminal charge against a defendant has been dismissed following successful completion of an ILC program “the court may order the sealing of records related to the offense in question in the manner provided in sections 2953.31 to 2953.36 of the Revised Code.”

R.C. sections 2953.31 through 2953.36 address the process by which an offender who has been convicted of a criminal offense may seek expungement of his record. Those sections require that the court delay consideration of a defendant’s motion to seal a record until after a waiting period of one year if the conviction was for a misdemeanor, or a waiting period of three years if the conviction was for a felony.  In contrast to these waiting periods, a separate section of the same statue, R.C. 2953.52, allows a court to immediately consider a defendant’s motion to seal his or her  record in cases where a charge was dismissed by the court without a conviction. The ILC statute does not make reference to R.C. 2953.52.

In this case, Regina Niesen-Pennycuff was charged in April 2009 with multiple counts of deception to obtain a dangerous drug, a fifth-degree felony. Niesen-Pennycuff asked the court to allow her to participate in its ILC program. The court found that she met the eligibility criteria and granted her motion. In August 2010, the court determined that she had successfully completed her intervention program and the required period of abstention, and dismissed all counts against her.  Pursuant to the ILC statute, no conviction or determination of guilt was recorded.

In September 2010, Niesen-Pennycuff filed a motion to seal the record of her case under R.C. 2953.52, the provision of law applicable to charges that have been dismissed without a conviction. The trial court denied that motion based on its reading of the ILC statute to require that the waiting periods specified in R.C. 2953.31 through 2953.36 must expire before an ILC defendant’s record may be sealed. Because the charges against Niesen-Pennycuff had been felonies, the court held that it could only consider a motion to seal her record after three years had elapsed from the date those charges were dismissed. Niesen-Pennycuff appealed. The 12th District Court of Appeals affirmed the trial court’s ruling, but certified that its decision was in conflict with a 1996 decision, State v. Fortado, in which the 9th District held that a defendant whose charges had been dismissed after completing an ILC  program was entitled to immediate consideration of a motion to seal his record under R.C. 2953.52. 

The Supreme Court agreed to review the case to resolve the conflict between appellate districts.

Attorneys for Niesen-Pennycuff argue that, like any other criminal defendant whose charges have been dismissed without conviction, she is entitled under R.C. 2953.52 to immediately apply to the trial court for the sealing of her record.  While acknowledging that the ILC statute specifically refers to sealing of a defendant’s record  “in the manner provided under R.C. 2953.31 to 2953.36,” they point out that those code sections address only cases in which there has been a conviction, and urge the Court to concur with the 9th District’s conclusion in Fortado that the waiting periods set forth in those statutes cannot lawfully be applied in an ILC dismissal case such as this one, because only a conviction can trigger the beginning of such a waiting period.

If the Court finds that Fortado should not be followed, they urge the justices to adopt an alternative approach taken by the 3rd  District in a 2004 decision, State v. Smith.  In that case, they say, the 3rd District held that while R.C. 2953.52 authorizes a trial court to immediately consider an ILF defendant’s motion to seal the record of a charge that has been dismissed, the language in R.C. 2951.04(E) permits but does not require a court to consider on a case-by-case basis whether the defendant’s record should be immediately sealed or if a one-year or three-year waiting period as provided in R.C. 2953.31 through 2953.36 would be more appropriate.

Attorneys for the state urge the Court to affirm the rulings of the trial court and 12th District that the plain language of the ILC statute permits a court to consider a defendant’s motion to seal his or her dismissed charge only after the mandatory waiting periods imposed by R.C. 2953.31 through 2953.36 have run. They argue that if the legislature intended to allow the dismissed charge(s) in an ILC case to be immediately sealed, it could and would have made reference in the ILC statute to R.C. 2953.52, and would not have required that requests to seal records in such cases may be considered only under  other specific statutes that impose a mandatory waiting period.

Contacts
J. Michael Greer, 513.695.1325, for the state and Warren County prosecutors' office.

Nicholas D. Graman, 513.932.2115, for Regina Niesen-Pennycuff.

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Attorney Discipline

Disciplinary Counsel v. Dean Edward Hines, Case no. 2011-1759
Montgomery County

The Board of Commissioners on Grievances & Discipline has recommended that the license of attorney Dean E. Hines of Centerville be suspended for one year, with the final six months of that term stayed on conditions, for professional misconduct arising from his involvement in a consensual sexual relationship with a client.

Hines has filed objections to the board’s findings of aggravating factors in the case and its recommendation of an actual suspension from practice. He cites other cases in which attorneys engaging in similar misconduct who made no effort to deny or conceal their relationship and cooperated with disciplinary authorities have received only reprimands or stayed license suspensions, and urges the Court to follow those precedents and impose a fully stayed suspension as the appropriate sanction in his case.

In its response to Hines’ objections, the Office of Disciplinary Counsel agreed that the facts of this case are similar to those in the prior decisions cited by Hines, and joined him in recommending that the Court impose a fully stayed license suspension.

Contacts
Jonathan E. Coughlan, 614.461.0256, for the Office of Disciplinary Counsel.

Dean Edward Hines, pro se, 937.439.5708.

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.